Band's Bet on Buffett
12/31/2004 12:00 am EST
For his Top Pick for 2005, Richard Band, long one of my favorite advisors, opts to invest in another of my personal favorites—Warren Buffett. Here, the editor of Profitable Investing looks at Buffett's holding company, Berkshire Hathaway.
"It’s hard to think of Warren Buffett’s Berkshire Hathaway (BRK.A NYSE) or (BRK.B NYSE) as an undiscovered gem. Yet the stock today is remarkably cheap. Try comparing Berkshire’s share price with the company’s 'intrinsic value'—the value of all the operating businesses Berkshire owns, plus securities and cold, hard cash, which represents $38 billion of its total value.
"Berkshire is currently trading about 40% below its breakup value. That’s just about the deepest discount of the past 15 years. Anytime you can buy Warren Buffett, the 'Master of the Investment Universe', at this kind of a bargain, I say, 'Pounce!' If you can’t afford the Class A shares (which are currently quoted around $88,000), go with the Class B shares, each of which represents one-thirtieth the liquidation value of a Class A share, and thus trade at one-thirtieth of the price of the A shares."